Lift-outs are becoming an increasingly popular outsourcing strategy in private markets, offering fund managers a seamless way to transfer operational functions—and the associated personnel—to third-party providers. This approach allows firms to streamline their processes, reduce costs, and maintain continuity while leveraging the expertise and advanced technology of external partner
The rise of lift-outs in private markets
Findings from our Global Custodian research report, Leading the shift: Transforming private markets in a retail-driven landscape, reveal that 65% of firms have implemented lift-out strategies in the past three years. The primary drivers behind the adoption of lift-outs include:
- Cost reduction (58%)
- Access to specialised talent (52%)
- Access to advanced technology (50%)
- Improved risk management (43%)
- Scalability (24%)
These benefits highlight how lift-outs can help fund managers optimise their operations and adapt to the increasing complexity of private markets.
The advantages of lift-outs
By transferring in-house functions to third-party providers, firms can reduce overhead costs while preserving institutional knowledge and relationships. This balance is particularly valuable for asset managers who aim to improve efficiency without compromising the quality of their services.
Lift-outs also provide access to cutting-edge technologies and processes, helping managers stay competitive in a fast-evolving industry. Additionally, enhanced risk management ensures operational resilience, which is increasingly demanded by investors and regulators.
Challenges and opportunities
Despite their advantages, lift-outs are not without challenges. Firms must address concerns related to:
- Ensuring a smooth transition while maintaining service continuity.
- Protecting data security during and after the transfer.
- Retaining critical talent and expertise throughout the process.
To make lift-outs more attractive, respondents in our research identified several factors that could enhance their appeal:
- Access to better technology (70%)
- Improved regulatory frameworks (59%)
- Stronger support from service providers (53%)
- Enhanced retention strategies (33%)
The future of lift-outs
Lift-outs are poised to play a significant role in the future of private market operations. As the demand for cost efficiency and advanced technology grows, more firms are likely to adopt this model to meet investor expectations and regulatory requirements.
By addressing the challenges associated with lift-outs, fund managers can unlock their full potential, ensuring smoother transitions and improved operational performance.
Download our latest research report for industry insights
To learn more about lift-outs and their impact on private markets, download our full research report by completing the form below: Leading the shift: Transforming private markets in a retail-driven landscape.
